What are veterans home loans
The economy of the United States really has never been the same since 1944 when the GI Bill caused a change in the market place by creating Veterans home loans. Suddenly members of the United States military who had previously only be able to dream of home ownership, now had those dreams within their grasp when President Franklin D. Roosevelt signed the GI bill, and programs for Veterans home loans were created. No longer were those who protect our freedoms at a disadvantage, as compared to those who stayed home while they fought abroad.
Requirements for obtaining Veterans home loans are not difficult. Have you been honorably discharged from the armed forces and served at least 6 months (or 90 during war time)? You too can get one of these Veterans home loans. Are you currently serving on active duty in the armed forces? Congratulations Veterans home loans are available to you. Did you spend six years as a member of a National Guard or reserve unit? You also qualify for Veterans home loans. Are you retired from active duty service? You qualify as well. And not to forget the loved ones of fallen servicemen, Veterans home loans are available to the widows of deceased veterans. Over the years Veterans home loans have become available to more than 25 Million American service men and women.
Veterans home loans are different from conventional loans and have benefits that conventional loans do not offer. For example the Department of Veterans Affairs offers a guarantee of up to 25% of the loan amount to the lenders of Veterans home loans. The 25% guarantee is generally on Veterans home loans amounting up to $417,000, but that ceiling may be higher in part of the country where housing prices are higher. The Guarantee is paid to the lender in the event of a default on the mortgage, and usually replaces some of the common assurances that lenders require such as down payments. What does this mean for veterans? This makes it easier for veterans who take out Veterans home loans to qualify with these lenders. lenders become somewhat easier to deal with and the requirements for home ownership are reduced. With Veterans home loans the need for a large down payment is reduced, making it easier on borrowers. If veterans default on Veterans home loans, they are required to repay the amount paid by the guarantee before using the entitlement again.
Commonly Asked Questions.
What are the costs involved with Veterans home loans?They are much the same as with their conventional cousins. Just as with other mortgage products there are costs involved with Veterans home loans. Veterans home loans are subject to a VA funding fee. This fee varies based on the type of transaction involved. For a purchase by a veteran never having used Veterans home loans the fee is 2.15%, and for a “cash out” refinance of existing Veterans home loans the charge is 3.3%. The VA funding fee is only 0.5% for a streamline refinance. For example purchase Veterans home loans with a sales price of $250,000 would have a VA funding fee of $5,375. With any real estate transaction Title insurance is generally required. This insures the proper recording of the deed and other legal documents involved with the purchase or refinance, and serves as insurance for both the borrower and lender against liens or judgments against the property. Along with title insurance the title companies also charge for search and examination of the previous title which goes into the findings for the title insurance policy. All are percentages of the total loan value. The remaining costs of Veterans home loans are paid to the brokers and lenders. Brokers and lenders receive any discount points that are paid by the borrower to lower the overall interest rate as well as the Origination fees, which the VA has capped at 1%. Discount points (or more commonly referred to as “points”) are capped at 2% by the VA. Does my credit score matter with Veterans home loans?Simply put, yes it does. Guidelines on credit for Veterans home loans vary depending on the value of the home, as well as the loan product in question. The VA has not set strict guidelines for the credit scores required for Veterans home loans; however the lenders have stepped in with their own risk management teams and set their own guidelines. However across the board the credit requirements on Veterans home loans are in general much more lax as compared to conventional products. For example they are more lenient on streamline refinances where some lenders do not require a credit score at all, but are much more stringent with high value properties where the loan approaches the value of the home. |
How do I qualify for Veterans home loans?A copy of the DD-214 can establish your eligibility as a veteran. In general if you already have outstanding Veterans home loans they will have to be paid off in order to re-use the eligibility. If you have previously had Veterans home loans, the amount of your remaining eligibility must be verified to ensure your qualification. Are down payments required on Veterans home loans?With most Veterans home loans a down payment is not required. Veterans home loans are one of the last remaining 100% financing options left in the market place. This is an advantage for veterans who want to buy a new home but may not have the savings for a large down payment. Because of the guarantee afforded to the lenders by the Department of Veterans Affairs, lenders will generally not require down payments to be made. Can I refinance to a better rate later?Absolutely! In the future a simple streamline may make sense, or perhaps a cash out refinance to finally finish the basement with. With Veterans home loans you are afforded even more options when it comes to refinance, than with a conventional mortgage. Either way you have options. |
